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November 25, 2013

What
happens when the product reaches maturity and the sales start to slow down or
go into a decline? Three strategies can be adopted to extend maturity and increase sales 1) Find new uses 2) find new users 3) Induce more usage

New uses: The classic example
is that of Arm & Hammer baking soda. As demand for baking soda for
food preparation began to decline, the product was extensively researched to
find new uses. Some of the new uses found out for baking soda include

Baking
soda can be an odor suppressant for use in refrigerators.Baking
soda can be used as a Clog remover in kitchen sinksBaking
Soda can keep milk from getting spoiled in hot weather (useful in a hot and
humid country like India)Sprinkling
a little of baking soda in smelly shoes will deodorize themMaking
Baking soda into a paste and scrubbingthe walls will make the walls free of scuffs and crayon marks

Baking
soda can be used with a facial cleanser for a gentle, yet effective, exfoliant
face

Sprinkling
baking soda on carpets will take away
unwanted smells

A variation of
the above can be to
offer better options for existing users. Some companies, notably Intel, constantly replace
their company and product specific PLCs by introducing higher performance,
upgraded versions of their core products.When the 386 chip was eventually copied by competitors, Intel launched
the 486. Price and volume on the 386 were allowed to fall; marketing
emphasis was shifted to the 486.

When
the 486 chip was copied, the Pentium was launched, followed by the Pentium II,
the Pentium III, and so on. In other words, Intel constantly cannibalizes
its own products (takes sales away from them and lowers profitability) as a
strategy for growing their business.

New users: Products may be
initially developed and launched in a single market area, (e.g. the U.S).
As the product becomes established in that market, it may be launched in
a second geographic market (perhaps Europe), then a third (maybe Latin America
or Asia), and so on.

Each
of the local market areas is likely to conform to the typical PLC. When
the local PLC's are aggregated, they form a combined PLC that is both higher and
more extended than the original market's PLC.

Another
dramatic example that can be given is that of tooth paste. The sales of toothpaste
are dropping in the western markets. One strategy could be to introduce tooth paste
for pets – a very interesting concept. One caveat – take care that the branding
and the company that is selling the pet tooth paste have to be different from
the regular tooth paste maker. Many of the human
customers might find it disconcerting to find out that their own brand and
their dog’s brand of tooth paste are the same!

Induce more usage:
One of my marketing teacher’s had remarked “the soft squeeze” of the tooth paste
packaging being best innovation introduced by the tooth paste makers to induce
more usage. Similarly is the tactic of slight increasing of the size of the nozzle so
that more tooth paste can be dispensed with each usage (unlike other products
once the paste comes out it is not possible to put it back into the tube).

Some more things that have been
tried out include, having three colors of tooth paste tubes to indicate three
times usage (morning, afternoon and evening). It was tried by an Indian company
bit it came out as a naught.

Usually the tack of more usage is through
advertising. Initially the tooth paste makers said that one time brushing of
teeth was enough. Then they said that it has to be two times one on the morning
and once in the evening.Now it is imperative
that one has to brush the teeth every time one has solid or liquid food thus ensuring
that we clean our teeth at least 5 to 6 times a day. 5 to 6 times a day is
almost a week usage of tooth paste (when a person brushes his teeth once a day).
That way they can make us use 4 times more tooth paste and laugh their way to the
bank.

Profile

Dr.M. Anil Ramesh is an M.B.A, PhD from Osmania University, (overall 7th rank, 1st In Marketing stream), Hyderabad, India.
Presently Dr.M.Anil Ramesh is working as Director at Siva Sivani Institute of Management a Premier B-School based at Secunderabad, Telangana State.
Dr.M.Anil Ramesh has 30 years of experience both in Industry and in Academics. Widely read and traveled Dr.M.Anil Ramesh is a Management expert who appeared on many TV talks and shows. Dr.M.Anil Ramesh also writes a popular column in a popular English Daily Newspaper - HANS India.
The views expressed by the author in this blog are his own and do not necessarily represent the views of the institute where he works.
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